Income of large Polish families at a British level

22 Feb 2019 12:52|Marcin Lipka

“The latest Polish Central Statistical Office (GUS) data show that the income of large families in Poland increased by 50% within three years and only slightly diverges from the level recorded in Great Britain. However, not everyone benefits from a better economic situation and social benefits. There is a clear increase in the at-risk-of-poverty rate for single households and families with only one child," writes Marcin Lipka, Conotoxia Senior Analyst.

GUS has published a survey on the income of Poles (EU-SILC). Its results took into account the Family 500+ child benefit program and are also comparable at an EU level. This enables us to analyze how the level of earnings of Poles has changed in recent years in comparison with the population of other EU countries.

Rising income

One of the best indexes of purchasing power and wealth of households is the median of the annual equivalised disposable income. The median (half below this level and half above) reduces the impact of extreme values, e.g. very high.

Available income is the sum of annual income after tax and increased by social benefits or, e.g. tax returns. As a result, it is money that you have in your pockets and can spend on what you want.

In the GUS or Eurostat data, the equivalence scale is also added, which makes it possible to compare the situation of households which differ in terms of the number of members and their age. The income of a four-person family does not have to be four times higher than a one-person household in order to maintain the same standard, as, e.g. the cost of living in a flat or owning a car in the former case is divided into more people. Therefore, all income is divided by the sum of units assigned to individual persons. For the first person it is 1, for the next over 14 years it is 0.5, and for a child up to 14 years of age, it is 0.3.

From 2014 to 2017, the median equivalent income of Polish households increased from 22.4 thousand PLN to less than 26 thousand PLN. This is about 16% in three years, i.e. 5% annually. These are not spectacular increases, but taking into account the fact that in these years inflation was low, the standard of living should have significantly improved. The situation is much better for families with three or more children.

Having children pays off. Income almost like the British Isles

A huge leap compared to 2014 was made by families with three or more children. Here, the median income per capita equivalent increased in three years by 50% and reached 23 thousand PLN. The at-risk-of-poverty rate of these families decreased significantly. It dropped from 35.8% to 14.7%.

In turn, according to Eurostat data, the median equivalent income per capita is almost 10,000 euros in purchasing power parity (PPS - the difference in prices in individual countries is taken into account) for a large family with two parents. In Great Britain, it is only 12.5 thousand EUR PPS, which is only slightly more than in Poland. Still, in 2005, the median of income in Poland amounted to 3 thousand EUR, and in Great Britain to 13.8 thousand EUR PPS, i.e. almost 5 times more.

Apart from the general increase in salaries in households with three or more children, the Family 500+ child benefit program contributed to the increase in income in these families.

Risk of poverty decreases, but not everywhere

Compared to 2014, the risk of relative poverty decreased by 2 percentage points and amounts to 15%. It is still high in the eastern region of Poland (21.3% after a decrease by 1.2 percentage points).

Apart from a strong decrease in the risk of poverty among households with three or more children (from 35.8% to 14.7%), in some families, it statistically increased. In the case of households with one child from 10.8% to 14.5%, and in the case of single-person households from 20.3% to as much as 27.9%.

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